Diversification, as one of the major tools of policy, drew widespread attention in India in the recent past in the face of stagnant growth, incomplete agricultural transformation and low productivity. There are four dimensions of diversification—number of crops, spread of cropping pattern, proportion of high value crop in the cropping pattern and shift in cropping pattern mix. This paper examines the link between different dimensions of diversification and the growth of output in India, in the last three decades. The results show that there is great heterogeneity, in terms of typology of diversification within the states, with no clear-cut link of one type of diversification with income and risk pattern. The temporal picture shows that the role of crop diversification (change in crop mix) in the output growth is increasing in India, over time. However, the results suggest that diversification towards high value per se is not sufficient for increasing growth. It is also important that these high value crops remain remunerative over the period of time, through proper technological and market development, otherwise the gains from diversification will be meagre.

During the 1960s, the Indian economy was confronting the problem of food insecurity. Both market (infrastructure) and technology were less developed, which were mainly responsible for low output and higher variability in the returns of both the food and non-food crops. The introduction of Green Revolution was a step towards changing the orientation of farmers, in terms of the adoption of new and better technology. Also, the technological mission on oilseeds in the late 1980s, was an additional effort to improve the technology in another area of the agricultural sector. Both the efforts concentrated on technology-led development. These steps proved to be significant, not only in increasing food production in India, but also in increasing the growth of output, especially during 1970s and 1980s. However, the success did not sustain longer and from mid-1990 onwards, the country started facing low growth along with near stagnanation in food production (Chand, 2005). The module of development in the previous decades concentrated on a few food crops and, accordingly, several states showed patterns towards increased specialization in a few crops. Such development initiative or policy came under pressure, especially after the introduction of World Trade Organization (WTO) in 1995, that demanded reduction in support measures and subsidies. At the same time, a sustained economic growth, rising per capita income and growing urbanization caused a shift in the consumption patterns in favor of high-value crops, that also substantiated the role of diversification as a policy tool for development in the agricultural sector (Vyas, 1996; Kumar and Mruthyunjaya, 2002 and Joshi, 2005).

Diversification is one of the several components of growth in the cropping sector. In general, there are four components of growth—area, yield, diversification pattern and price. The growth in the cropping sector can be influenced by changing area, either through extensification or intensification of area; altering the cost of production, either through change in the prices of inputs or altering cost of obtaining inputs; and changing technology through new technology and input intensification, or altering output prices. In addition to these components, diversification or the cropping pattern mix can also influence growth by altering the allocation of resources.

Agricultural Economics Journal, Crop Diversification, Green Revolution, Technological Mission, World Trade Organization, WTO, Economic Growth, Per Capita Income, Agricultural Sector, Crop Diversification, Decision-Making Process, Cropping Pattern Mix, Technological Development, Crop Mix, Central Statistical Organization, CSO, Gross Cropped Area, Liberalization.